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Economics

This was an interesting webcast. Gundlach had a number of points that will make one think about one’s current market position.

There is a risk of a recession (#44-45).

Gold going to $1400. He admits to a blown 2015 call, but 2016 is the year.

Oil at bottom but do not expect a huge bounce. But, dollar weakness can help price.

Fed. raised rate in face of low inflation (also EU ‘deflation’) …

Trouble on the profit margin front …

India EM is one to look at once at bottom (~40% down from here).
 

Attachments

Current Problems Associated with the End of the Third Industrial Revolution
Current Problems Associated with the End of the Third Industrial Revolution | naked capitalism

This paper advances a hypothesis of the end of the third industrial revolution and the beginning of a new transition. Every production phase or civilization or human invention goes through a so- called transformation process. Transitions are social transformation processes that cover at least one generation. In this paper I will use one such transition to demonstrate the position of our present civilization. When we consider the characteristics of the phases of a social transformation we may find ourselves at the end of what might be called the third industrial revolution. The paper describes the four most radical transitions for mankind and the effects for mankind of these transitions: the Neolithic transition, the first industrial revolution, the second industrial revolution and the third industrial revolution.

The Dow Jones Industrial Average (DJIA) Index is the only stock market index that covers both the second and the third industrial revolution. Calculating share indexes such as the Dow Jones Industrial Average and showing this index in a historical graph is a useful way to show which phase the industrial revolution is in. Changes in the DJIA shares basket, changes in the formula and stock splits during the take-off phase and acceleration phase of industrial revolutions are perfect transition-indicators. The similarities of these indicators during the last two revolutions are fascinating, but also a reason for concern. In fact the graph of the DJIA is a classic example of fictional truth, a fata morgana.

History has shown that five pillars are essential in a stable society: Food, Security, Health, Prosperity and Knowledge. At the end of every transition the pillar Prosperity is threatened. We have seen this effect at the end of every industrial revolution. Societies will have to make a choice for a new transition to be started.

...
 
The PBoC and the Fed both lost credibility
TheMoneyIllusion » The PBoC and the Fed both lost credibility

The world’s two largest economies are facing a similar problem, a gradual loss of credibility in monetary policy. In China, the exchange rate is artificially fixed at too high a level for macroeconomic stability. The public recognizes this fact, and expects the Chinese government will eventually devalue. Not surprisingly, people are trying to get their money out of China before the devaluation occurs.

The problem in the US is different. Our government does not fix asset prices at non-equilibrium values. The Fed does peg the fed funds rate, but they do so by adjusting monetary policy tools, until the desired fed funds rate becomes the actual fed funds rate. So there is no disequilibrium in the sense of a shortage of fed funds, or a surplus.

But there can ben macroeconomic disequilibrium, if the fed funds rate is pegged at an inappropriate value. In recent weeks, Fed policy has lost credibility. In America this doesn’t show up as capital flight, but rather in terms of asset price movements:

…
 
Am I the only insane one that likes China at these levels? I may even drop some cash into FXI iShares. Such a tough market to trade in. I had a nice few years of selling covered calls 30 days out on SPY. I still feel the year will end on the upside. Just waiting for oil to find a bottom before I go all in on the long term.
 
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Monetary Policy is Not About Interest Rates
https://sites.google.com/site/kocherlakota009/home/policy/thoughts-on-policy/1-27-16

The Federal Open Market Committee has a problem. The problem is not that it raised rates by a scant quarter percentage point in December. The problem is the overall policy framework that led the Committee to take that action. The Committee needs to switch to a framework that is less focused on a particular time path of interest rates, and more focused on the achievement of its goals.

The FOMC’s current policy framework goes back to at least mid-2013. It can be defined by two key words gradual and normalization. Both words refer to the level of monetary accommodation. In terms of the target range for the fed funds rate, the word “gradual” is generally interpreted by those who watch the Fed closely to mean about four increases of a quarter percentage point. The word “normalization” is generally interpreted to mean “returning to about 3.5 percent”.

To be fair: the evolution of the macroeconomy does enter into this framework. But it only matters to the extent that it might lead the FOMC might tweak the pace of interest rate increases up or down. The main mission is still defined by those two key words: gradual and normalization.

Unfortunately, this mission of gradual interest rate normalization seems increasingly inconsistent with the FOMC’s being able to achieve its macroeconomic objectives over the medium-term. In terms of the FOMC’s employment mandate:https://sites.google.com/site/kocherlakota009/epop2554.png?attredirects=0&attachauth=ANoY7cq62wAzsMcsE6ISuvcAPjcy5pfCOTM7xM5w3mTfQ6JyXQn4w2M01H50VbXvCSbiuviHKtDsKwKYfV6HhF4MD6UBC8UBRY86y47Zj6mIHg3iMJGyD0chj04usMJ2Dt7hA2KX2rWcDMAXzrXzt6pi-dlK2PxW90YWO_YKwh8A33brF5S0T2OZ2zGs3l7n_iEamzZDoi0AQ2cTmtM1dwfIpI7mSRS80Q%3D%3Dwho have a job remains well below what Americans should view as “normal”. The nation needs above-trend growth for several more years to cure this problem - and that’s certainly not my forecast for 2016.

The above is somewhat arguable (because some see the low labor force participation rate as either desirable and/or beyond the reach of monetary policy). But the inflation picture is clear. Inflation has https://sites.google.com/site/kocherlakota009/pceinflation.png?attredirects=0&attachauth=ANoY7cpdpEKh64uTfXDs2YBSjQocO2s1bT6inuurb3uZYeP_cg-MkPwJF1vhe6IZY132OFTg4JPsC9_F2k4PlhIeW7Sb28fchC2QREI6L3Jr0XYXNlU8x51zv5txmzFaz2zyi-upekB3Td-Y__28OYaiavnOmul7-lHGwOu97KLOPaNVx01dAW-7v8_bnCbCGXims1pGLA7g6L0K51gGryPEMhqXgndndQ%3D%3D. Like many others (including, as the December minutes indicate, the FOMC’s own staff), I don’t expect it to return to target for several more years.

Both the inflation situation and (perhaps more arguably) the employment situation seem to call for more monetary stimulus, not less. But the FOMC is set on gradual normalization of interest rates. This framework seems grounded in a troubling aversion to both low interest rates and interest rate volatility. Markets have taken note of the FOMC’s aversion to unusual levels of monetary stimulus. We see clear signs that investors https://sites.google.com/site/kocherlakota009/inflationbe.png?attredirects=0&attachauth=ANoY7cqVgpIi8wHbgfJIuWaq6NOO1SjkkCPIdbvs3EO9QyO60Ai2TcKUJMjpjyIRwU_U8XkojKeyzZtVqMKpMJfuwpjfEbLNcd8g5wawOKkc9kfaY1uJPvKmCDFUOs5s_cHT2x4gQeVFscTuhJ0jyJqi1ZmHm2-2mnqYjWppora_qwJ6eK9j6vY2_HXDm_-bdjaXHgYTGpdy0B5k2_uPidaV4Q6ydXQFMA%3D%3Dover the long run - https://sites.google.com/site/kocherlakota009/home/policy/thoughts-on-policy/1-14-16.

The Committee needs to change its basic policy framework. Monetary policy is not about targeting the level and volatility of interest rates. The FOMC needs to have a framework in which the fed funds rate (and its other tools) are much more responsive to its medium-term forecasts of inflation and employment shortfalls. Markets would then have to adjust to the possibility that interest rates might have to change rapidly, at any time and in either direction, if the FOMC believes that change is necessary to achieve its macroeconomic objectives more rapidly.

And, yes: this goal-oriented framework would imply that the FOMC should undo its December rate increase. But that’s not my point. No given quarter percentage point move matters all that much in monetary policy. What matters is the overall monetary policy strategy - and the FOMC's is flawed.

If the Committee keeps its current policy framework, I believe that the FOMC is running a significant risk of a persistent decline in long-term inflation expectations. Such a decline would feed into the long-run level of interest rates, thereby reducing the recession-fighting capacity of the Fed, and increasing financial stability risks. Unfortunately, as Japan has shown us all too well, such declines are very hard to undo.
 
Charlie Munger
Charlie Munger

More people would benefit from Charlie if his thoughts were more accessible and if he was as prolific a writer as he is a reader. The best way by far to know Charlie is to read Poor Charlie’s Almanack.

“Charlie Munger is truly the broadest thinker I have ever encountered.” – Bill Gates
 
Michael Scally MD said:
Welcome to the new Men’s [And Women’s] Economics forum! It is TIME to make some $$$MONEY$$$. After following ALL things related to men’s health it dawned on me to start a forum devoted to the economics of Men’s [Women’s] Health, which, BTW, does include AAS as well. So, with input from others, LET’S MAKE SOME $$$MONEY$$$.

I have found the Meso members to be on the cutting edge of science and its clinical application. It is my hope that this will become a valuable and important asset to Meso. Why not use this to our advantage and, in the process, possibly benefit from one another’s input.

For example, I have been following Pharmasset, Inc. (VRUS) – Gilead Sciences, Inc. - for over a year. In that time, their share price has risen from $30 to over $125!!! This is still one of the hottest stocks. For more, check out the Pharmasset, Inc. (VRUS) thread. It is, IMO, a WINNER!

On the downside, there is Dendreon Corporation (DNDN) - Cancer Treatment, Research & Development - Dendreon.com , which I have been checking on for the same time. I was a skeptic form the start for this new and innovative therapy. The share price skyrocketed after FDA approval only to see it plummet to Earth after their recent disappointing (and shameful) quarterly report. It is, IMO, still a BUST.

Each thread will be devoted to a company whether they are Public or Private. The original thread post will contain important information on the company. This will include their R&D focus and, if Public, links to their website home page, Investor relations (IR), Google Finance (GF), Yahoo Finance (YF), Seeking Alpha Finance (SA), and the Securities Exchange Commission (SEC).

Also, where available, I have included the 2010 10-K (Annual Report) and the most recent 2011 10-Q (Quarterly report). These will provide a good guidance on the company financials.

If anyone has a suggestion for a company to be followed, please use the format of the original post for each company thread. Or just make a reply on this thread! Or, Email or PM me and I will start the thread. All comments, suggestions, recommendations, etc. are welcomed.

I highly recommend checking back often to watch our progress and profit!
Click to expand...
Really great thread!
 
Our money system guarantees that inequality will get worse – Here is the evidence
Our money system guarantees that inequality will get worse - Here is the evidence - Positive Money

The gap between the very richest and the rest of us has increased continuously over the last thirty years. Did you know that top 10% of population earns on average 6 times more than the bottom 90%?

Many factors contribute to this growing gap, but one of the most significant is least understood: the role of money creation by banks.

As a volunteer for Positive Money, I’ve spent much of the last two years investigating the connections between inequality and the money system. The evidence I’ve compiled suggests that there are several factors contributing to the growth of inequality, but at the heart is the operation of the banking system. If we want to tackle inequality, we need to change the way that money is created.
 
It’s Time for Investors to Re-Learn the Lost Art of Reading
It’s Time for Investors to Re-Learn the Lost Art of Reading

…

His 16 favorites so far: Activision Blizzard, http://quotes.wsj.com/ATU, http://quotes.wsj.com/Y, Amerco, http://quotes.wsj.com/ATP.T,AutoZone, W.R. Berkley, Capital One Financial, Cimpress, Credit Acceptance, http://quotes.wsj.com/CFI, eBay,Everest Re Group, http://quotes.wsj.com/EXAM, Fossil Group and Hingham Institution for Savings. (He leaves Mr. Buffett out of his analysis, because “everyone” knows he writes a great letter.)

[RELATED: Read what made Mr. Abbott nominate each company in “16 Favorite Annual Letters from an Investor Who’s Read More Than 1,000.”]

“Writing an extensive letter helps me clarify our strategy and put signposts on the map of where we’re trying to go in the long run,” said Weston Hicks, chief executive of Alleghany Corp. “If you attract short-term shareholders, you can be forced to do things that aren’t in the company’s best long-term interest.”

Mr. Abbott owns only one of those 16 stocks — Credit Acceptance, which he bought years ago, before he began his reading project — and might not invest in any of the others after he studies them more thoroughly. He sets a high bar and holds just six stocks in his fund. But the best letter writers will go on his list of companies to learn more about.
 
@Michael Scally MD just read the thread and i appreciate your insight on your opinion in economics. I've done some boiler room things before and appreciate the stuff your putting out. You gotta think about those rainy days. I will be following your posts and may add some if you don't mind. Thanks again
 
Unmasking the Men Behind Zero Hedge, Wall Street's Renegade Blog
Unmasking the Men Behind Zero Hedge, Wall Street's Renegade Blog

Colin Lokey, also known as "Tyler Durden," is breaking the first rule of Fight Club: You do not talk about Fight Club. He’s also breaking the second rule of Fight Club. (See the first rule.)

After more than a year writing for the financial website Zero Hedge under the nom de doom of the cult classic’s anarchic hero, Lokey’s going public. In doing so, he’s answering a question that has bedeviled Wall Street since the site sprang up seven years ago: Just who is Tyler Durden, anyway?

The answer, it turns out, is three people. Following an acrimonious departure this month, in which two-thirds of the trio traded allegations of hypocrisy and mental instability, Lokey, 32, decided to unmask himself and his fellow Durdens.

Lokey said the other two men are Daniel Ivandjiiski, 37, the Bulgarian-born former analyst long reputed to be behind the site, and Tim Backshall, 45, a well-known credit derivatives strategist. (Bloomberg LP competes with Zero Hedge in providing financial news and information.)

In a telephone interview, Ivandjiiski confirmed that the men had been the only Tyler Durdens on the payroll since Lokey came aboard last year, but he criticized his former colleague's decision to come forward.

….
 
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